We went undercover as ticket scalpers — and Ticketmaster offered to help us do business

As gatekeeper to the entertainment industry’s most coveted events, Ticketmaster implements strict purchasing limits designed to prevent scalpers from using bots to buy tickets on a mass scale. In the past, company officials have publicly disparaged the resale ticket market, calling scalpers “pirates” and a threat to fans — even urging governments to criminalize the activity.

But in one corner of the Las Vegas convention floor sat a conspicuous Ticketmaster booth welcoming scalpers with a solemn reassurance: Ticketmaster wants to share in the profits of the resale market by facilitating the mass scalping of its tickets — in direct violation of its own terms of use.

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Reporters from the Star and CBC, posing as small-time scalpers from Canada, listened as sales staff pitched a proprietary Ticketmaster software program designed to help bulk buyers resell thousands of tickets.

“I have brokers that have literally a couple of hundred Ticketmaster accounts,” said a sales executive with Ticketmaster Resale speaking to the undercover reporters.

The web-based tool — called Trade Desk — allows scalpers to seamlessly sync their Ticketmaster accounts (where they buy their tickets) with their online resale operation, quickly posting each seat to ticket reselling websites including StubHub, Vivid Seats and ticketmaster.com.

It also gives Ticketmaster a new revenue source: a second commission on every “verified resale” ticket sold on Ticketmaster.com (on top of the commission it collects on the original purchase of each ticket).

Ticketmaster’s terms of use prohibit customers from buying “a number of tickets for an event that exceeds the stated limit for that event.” That limit, which is posted when tickets go on sale, is typically six or eight seats per buyer.

“If we identify breaches of these limits … we reserve the right to cancel any such orders,” read Ticketmaster’s general terms and conditions. “Use of automated means to purchase tickets is strictly prohibited.”

But ticket resellers who break those rules have no reason to be concerned, the sales executive reassured. A blind eye will be turned.

“We don’t spend any time looking at your Ticketmaster.com account. I don’t care what you buy. It doesn’t matter to me,” said the Trade Desk sales executive. “There’s total separation between Ticketmaster and our division. It’s church and state … We don’t monitor that at all.”

Trade Desk staff are aware their users harvest tickets using multiple Ticketmaster accounts, the sales executive said.

“They have to because if you want to get a good show and the ticket limit is six or eight (seats), you’re not going to make a living on eight tickets.”

Star and CBC reporters asked what happens if staff at Ticketmaster headquarters detect unusual activity in the purchasing patterns of a Trade Desk user, such as the use of bots. Will they ask for information from the resale division?

“No,” he said. “We don’t share reports. We don’t share names. We don’t share account information with the primary side, period.”

Reporters from the Star and CBC attended the ticket scalpers conference in Vegas undercover because media were not allowed into sessions where the collaboration between Ticketmaster and scalpers was to be discussed. For months, Ticketmaster has declined interview requests to address these issues. After attending the conference, the Star and the CBC gave Ticketmaster an opportunity to review what their sales people had said and comment. They declined.

In response to a detailed list of questions, the company provided a statement.

“As long as there is an imbalance between supply and demand in live event tickets, there will inevitably be a secondary market,” wrote Catherine Martin, a spokesperson for Ticketmaster. “As the world’s leading ticketing platform … we believe it is our job to offer a marketplace that provides a safe and fair place for fans to shop, buy and sell tickets in both the primary and secondary markets.”

Ticketmaster has previously claimed to have stopped five billion purchase attempts by bots in 2016 alone.

“In addition to our work fighting the use of automated bots, we have also taken the most restrictive stance on speculative ticketing, not allowing any seller, professional or otherwise, to post tickets we have not validated to our TM+ pages,” Martin added.

Richard Powers, associate professor at University of Toronto’s Rotman School of Management, said publicly criticizing scalpers while quietly helping them is “misleading” and “unethical.”

“Helping to create a secondary market where purchasers are duped into paying higher prices, and securing themselves a second commission, should be illegal,” he said.

The monopoly Ticketmaster enjoys “allows them to do pretty much whatever they like and, until a government has the will to end this practice by appropriating resources and establishing significant penalties for transgressions, the practice is likely to continue,” Powers said.

Reg Walker, a leading British expert on ticket scalping, questioned why Ticketmaster would make a program for scalpers.

“Why on earth would you design software to list tickets in bulk on your secondary site for people who could be reasonably suspected of having attacked your primary site?” said Walker, who runs a security consulting firm in London.

“They are facilitating or turning a blind eye to (scalpers) with multiple accounts harvesting tickets in bulk and reselling them, despite the fact they pontificate they do everything to stop this. That needs investigating by the authorities.”

Allegations about Ticketmaster courting scalpers with preferential treatment recently emerged in California court filings as part of a 2017 lawsuit the company filed against three ticket brokering companies accusing them of using computer bots to “improperly procure tickets for the purpose of reselling them at a substantial profit.”

In response, Prestige Entertainment West Inc. alleges that Ticketmaster uses its website to “deceive consumers and line its pockets from double-dip commissions.”

“The vast majority of ticket reseller activity is patently obvious to (Ticketmaster), and yet (Ticketmaster) does nothing to prevent this activity, failing to block or terminate accounts … where account-holders are purchasing tickets in quantities that are obviously not for personal use,” reads the responding filing.

“(Ticketmaster’s) willing embrace of ticket reseller activity on its website is a core part of its business model as is the enhanced profits that (Ticketmaster) obtained from double-dip commissions.”

None of the allegations have been proven in court.

Walker reviewed a transcript of the conversation with a Trade Desk salesperson and concluded: “I think it strips away the PR and the hype and the spin that Ticketmaster acts to protect consumers and give them a fair crack at getting the ticket at face value … and basically exposes what could be extremely dubious activity that disadvantages genuine music and sports fans.”

During a video conference this spring, another Trade Desk sales executive, speaking with Star and CBC reporters who posed as brokers, explained how Ticketmaster does not want to catch scalpers using multiple accounts.

“We’ve spent millions of dollars on this tool, so the last thing we’d want to do is, you know, get brokers caught up to where they can’t sell inventory with us,” he said. “We’re not trying to build a better mousetrap. I think the last thing we want to do is impair your ability to sell inventory. That’s our whole goal here on the resale side of the business.”

Using Trade Desk brings an immediate 3 per cent discount on Ticketmaster’s usual 7 per cent selling fee on a resale ticket. And the more users scalp, the greater the incentives become.

Once they hit $500,000 in sales, a percentage point is shaved off their fees. At $1 million, another percentage point falls off.

“Scalpers get preferential treatment over consumers,” says U.K. expert Walker. “An average consumer would not need this software to list the ticket they could no longer use … This is simply done to assist touts (scalpers) in processing more and more tickets faster and faster and faster.”

In a session closed to media, Ticketmaster Resale senior director Casey Klein stood in front of conference room packed with hundreds of scalpers. An image of a sharply ascending graph illustrating broker registrations over the past five years loomed behind him. It was headlined, “We Appreciate Your Partnership: More Brokers are Listing with Ticketmaster than Ever Before.”

“(We want to) make sure brokers know that they have the ability to sell on Ticketmaster Resale but also that we’re committing significant resources to help you do that,” he said. “I’m confident there is no company more capable of helping you succeed in a mobile world than Ticketmaster Resale.”

That language contradicts what company officials have said about the resale industry over the past decade.

In a 2007 written submission to a U.K. House of Commons committee examining ticket scalping, Ticketmaster U.K. argued that the “unauthorized resale of tickets for profit does not promote fair and equitable distribution of tickets, and drains tickets away from the primary market, thus restricting the opportunity for genuine fans to purchase them legitimately.”

The company urged British lawmakers to make the marked-up resale of event tickets a criminal offence.

That didn’t happen.

Early the next year, in an apparent effort to join the resellers if it couldn’t beat them, Ticketmaster purchased two online resale websites, TicketsNow (Canada/U.S.) and Get Me In! (U.K.).

That move was the subject of regret by 2009, according to company testimony before U.S. lawmakers.

Irving Azoff, former CEO of Ticketmaster, told a U.S. federal hearing he never liked the idea of Ticketmaster being in the secondary ticket sales market.

“I never would have bought it,” he told the hearing. “The whole secondary area is a mess. In a perfect world, I personally would hope that there would be a more transparent, accurate primary that would do away with the need for any secondary whatsoever.”

During discussions of a merger between Ticketmaster and Live Nation, Azoff told the committee: “I believe that scalping and resales should be illegal … I don’t believe there should be a secondary market at all.”

The Ticketmaster/Live Nation merger was allowed in 2010 based on an order that the new company enter into a consent decree to avoid anticompetitive conduct.

Four years later, in 2014, the U.S. Federal Trade Commission settled charges with Ticketmaster for using “deceptive bait-and-switch tactics to sell event tickets to consumers.” The federal agency alleged Ticketmaster steered unwitting ticket buyers to its TicketsNow secondary site where seats were sold at inflated prices of up to four times their face value.

Ticketmaster agreed to refund consumers who bought tickets to 14 Bruce Springsteen concerts in 2009 through TicketsNow, and to be clear about the costs and risks of buying through its reseller sites.

In April, the New York Times reported Ticketmaster’s parent company, Live Nation, is under investigation by the U.S. Justice Department for possible antitrust violations.

Last month, Ticketmaster U.K. shut down the Get Me In! and Seatwave resale sites even as it recruits scalpers in North America for its burgeoning resale division.

“Our number one priority is to get tickets into the hands of fans so that they can go to the events they love,” Andrew Parsons, Ticketmaster U.K. managing director, said in a statement. “We know that fans are tired of seeing tickets being snapped up just to find them being resold for a profit on secondary websites, so we have taken action. Closing down our secondary sites and creating a ticket exchange on Ticketmaster has always been our long-term plan.”

U.K. ticket expert Walker has four words to account for Ticketmaster’s contradictory business approaches on either side of the Atlantic when it comes to ticket reselling: “hypocrisy at its finest.”

Robert Cribb is a Toronto-based investigative reporter. Follow him on Twitter: @thecribby